Van Hollen Sues FEC to Disclose Corporate, Labor Election Contributors

Capital News Service
Thursday, April 21, 2011


WASHINGTON - Rep. Chris Van Hollen, D-Kensington, sued the Federal Election Commission Thursday over election contribution disclosure regulations that he believes fail to comply with federal law.


The rules govern contributions made by individuals to corporations and labor unions that are then used for "electioneering communications" like television and radio ads. The suit, which comes as candidates are gearing up for the 2012 races, alleges that the donations should be disclosed under the Bipartisan Campaign Reform Act of 2002.


Van Hollen, former chairman of the Democratic Congressional Campaign Committee, pushed for the identification of donors in a bill he sponsored last year, the "Democracy is Strengthened by Casting Light on Spending in Elections" or DISCLOSE Act.


The bill passed the House but did not have sufficient support to end a Senate filibuster. President Obama expressed disappointment at the failure of the bill.


"Today's decision by a partisan minority to block this legislation is a victory for special interests and U.S. corporations -- including foreign-controlled ones -- who are now allowed to spend unlimited money to fill our airwaves, mailboxes and phone lines right up until Election Day," he said in a statement last September.


Fred Wertheimer, an attorney involved in the case and president of the non-profit organization Democracy 21, which seeks to reduce private money in politics, said the lawsuit aims to prevent organizations from hiding donor names.


Wertheimer called the regulation that allows corporations and labor unions to avoid disclosure "absurd."


The FEC rules require that contributions that are specifically designated for the "purpose of furthering electioneering communications" be made public.


But "no one gives contributions that are going to be that restrictive," Wertheimer said.


If the funds are not earmarked as "electioneering communications," the corporation does not have to reveal the donors' names, he said. "So no one earmarks and no one is disclosing."


"The absence of transparency will enable special interest groups to bankroll campaign initiatives while operating under a veil of anonymity," Van Hollen said in a written statement.


"If we have the same situation in 2012 as we did in 2010, tens of millions and likely hundreds of millions of dollars are being spent on political communications, the root of which cannot be traced," said Dave Levinthal, spokesman for the Center for Responsive Politics. Making the donors' identities public would help voters make more informed decisions at the ballot box, he said.


The complaint cited several examples of non-disclosure during the 2010 campaign cycle including $1.1 million in electioneering communications by Crossroads Grassroots Policy Strategies, a conservative 501(c)(4) nonprofit organization that does not identify its donors.


The 501(c)(4) designation refers to the section of the tax code that provides the group with tax exemptions.


Jonathan Collegio, Crossroads GPS communications director, said the lawsuit was "less of a legal matter and more of a political maneuver."


Van Hollen, Collegio said, is attempting to exempt labor unions from the scrutiny he wants for corporations.


The outcome of the case might have more immediate impact on right-leaning organizations because there are more of them on the conservative end of the political spectrum, Levinthal said. Ultimately it will affect everyone.


"The bottom line is that while there are more 501(c)4s that lean conservative today, that doesn't necessarily mean that would be the case in the future."


More than 137,000 organizations are 501(c)(4) groups, Collegio said. "A politically motivated lawsuit is unlikely to overturn how these organizations operate," he said.


When the regulations were adopted in 2007, the Supreme Court had not yet ruled in the Citizens United v. FEC case, which eventually struck down limitations on corporate spending for political broadcasts.


Wertheimer said some of the regulations were adopted at a time when people were not focused on the contribution disclosure provisions. Now that the Citizens United decision allows corporations and organizations to fund electioneering communications, the disclosure issue becomes more pressing.


Van Hollen also filed a petition with the FEC to revise its regulations to require organizations that make "independent expenditures" in elections to disclose the identities of their donors.


The petition is in lieu of a court challenge because "the six-year statute of limitations bars a direct challenge of the 'independent expenditure' regulations in court," according to Van Hollen's statement.


In the petition, Van Hollen says the changes are necessary because the current rules allow a corporation or labor organization that makes independent expenditures to refrain from disclosing its donors, even if they gave money "specifically for the purpose of furthering the corporation's or labor organization's independent expenditures."


Representatives of the FEC declined to comment on the pending litigation.


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